Frugal Without a Cause

I made a grocery run on Saturday. Not because the pantry or refrigerator were empty. They were quite full, actually. I went to the neighborhood regional grocer on Saturday because the weekly advertised specials ended on that day, and there were a lot of good values in the ad that couldn’t be missed!

Armed with the Sharpied-up ad with circled products and prices, I meandered through the aisles picking up the essentials like 36 taco shells, 8 pounds each of both sugar and flour, a couple jars of peanut butter, and some dog treats that were marked down to a dollar, (but looking at the receipt, I see I paid $2.29). Dang it!

All together, I bought 27 items for $45.86, compared to the “everyday low price” of $87.68, a savings of $41.82. Darned near half price. Big score, right?

nice work, sir saves-a-lot

Meanwhile, I have a habit of checking my investment balances daily. It’s not a great habit, but Personal Capitalmakes it really easy to do, and frankly, it’s a hard habit to break.

On a slow or mixed day, the grand total of my investments changes by a 3 or 4-figure sum. Most weeks, the day-to-day swing will be a 5-figure number at least a couple times. On a particularly good or bad week, I can gain or lose a full year of my family’s expenses from the nest egg (although technically I don’t gain or lose anything because I’m not selling). I understand that some volatility is normal with a fairly aggressive portfolio, and I’m comfortable with it, but it really puts into perspective the 2-figure sum of $41.82 I saved on the grocery bill.

Why so frugal?

Frugality is a mostly learned habit. Some of us were raised to live frugally out of necessity, or as a result of being raised by parents who were raised by survivors of the Great Depression. Many of us had to be frugal in medical school and residency just to get make ends meet. I had a negative net worth in my later twenties, and I didn’t like that feeling at all. When I finished residency at age 30, I started to splurge a bit, but I had a lot of ingrained frugal habits that are alive and well ten years later.

I’m not ashamed of my frugal ways, but when I look at the big picture, I realize that at this point, I’m like a seriously uncool James Dean. I have neither the jacket nor the hair. A Frugal Without a Cause.

Since my family is now financially independent after years of living below our means, we could afford to start living closer to our means. The fact is we’re not exactly wanting of anything that money can buy. Except perhaps freedom, which is something I expect I’ll buy in another 5 years or so.

I also realize that increasing our spending alters the FI equation, and I don’t want to be a fraud. Having told the internet that I’m now FI, spending an extra $20,000 a year would require another half-a-million bucks, and I’m not quite there yet!

What frugal habits should we drop?

At some point, frugality will have largely served its purpose. It helped you get out of debt, to start building a nest egg, and perhaps even attract a life partner with similar ideas about money.

If the internet is any indication, it can be difficult to break free of old habits even when they might be doing you more harm than good (see Bogleheads threads here, here, and here (there are dozens of similar threads, but 3 is more than enough)).

I believe your life can actually improve in some ways by letting go of some of those frugal ways: How so?

Better experiences. A walk in the woods is free, but the entrance fee to the museum / amusement park / ballgame is a whole different experience.

New friends. The beer in your fridge costs less, but the ales & lagers at your local taproom are also being enjoyed by neighbors who share your passion for craft beer.

have a seat. make a friend.

If you’ve read my posts about frugality, and you’re starting to get the feeling that I’m conflicted, you couldn’t be more right. On one hand, frugality has played a big role in putting us in a great financial situation today. On the other, many of our frugal habits are largely inconsequential, and may actually be holding us back from living a life of optimal happiness.

The Difference Between Frugal and Cheap

It’s important to distinguish pragmatic frugality from dastardly cheapness. A frugal person might choose not to spend on himself, but is willing to spend more freely on others.

A cheap person isn’t willing to pay the price of admission, even when the rest of the group wants to go. A frugal person has already scouted out something fun for everyone to do that won’t break the bank.

A frugal person might forego buying dessert at the restaurant and have some ice cream at home. A cheap person splits the bill by throwing in $12 for their $11.95 burger, leaving his “friends” to pick up the tax and tip. Oh, yeah… thanks for the nickel, friend.

A frugal person buys the first round at happy hour. A cheap person reluctantly takes orders when half his friends are in the bathroom or otherwise occupied.

A Frugal Mindset

I still have a mindset that celebrates little money-saving victories, and I don’t think frugality is inhibiting our ability to live a fulfilling life. While I do try to remind myself it’s alright to loosen up those purse strings, I don’t often feel the need. If it ain’t broke, don’t fix it.

Not long ago, I started tracking our actual expenses. The good news is, we are actually FI, as we said we were. The bad news is the monthly expenditures seem frighteningly high for a relatively frugal physician’s family that carries no mortgage or any other debts.

While I would like to say we’d be comfortable spending a bit more, it might not be worth the shudder at the end of the month when we review the monthly output. In other words, I’m still trying to figure this out. When I have life mastered, I’ll let you know. Until then, I’ll keep writing.

What’s your take on frugality? Is frugal living a trait you are trying to learn or trying to break? Are you also Frugal Without a Cause, or a Hopeless Spendthrift? Maybe you’re comfortable with the status quo? Are you in agreement with your S.O.? Let us know and comment below!

I track my expenses also. I think it becomes addictive at some point. I also shop Target and stack coupons as a game. I think I am more mindful of spending now and much less likely to spend as a form of retail therapy.

If you’re spending too much, tracking where the money goes can be a real eye-opener and identify ways to cut back. When you’re already pretty frugal, tracking can be downright frustrating. I’d like to see the numbers shrink, but there’s nothing I’m willing to give up. I guess that means we’ve found a good balance.

I started tracking my expenses very closely beginning in January. I think that exercise alone subconsciously helps you reduce expenses because at the end of the month you see you spent $300 on god knows what, when it was totally unnecessary. I’ve cut my expenses to where I am comfortable. I spend more than the MMM family as a whole, but for me it works. I think frugality is a great tool to get your expenses lower and to a more manageable number, but you shouldn’t keep cutting at the potential risk of eliminating things that make you happy or help you reach your goals. But hey – who doesn’t LOVE a bargain or negotiate on a big purchase 🙂

It’s really interesting to see exactly where the money goes, isn’t it?

I anticipate finishing out the year with spending about triple that of Mr. Money Mustache (who spends about $24k per year despite having a blog that brings in more income than an average anesthesiologist!).

Like you, I’m pretty comfortable with where we’re at and I struggle to find any line items that I would eliminate. There’s certainly nothing in the ledger that I can’t afford. Thanks for stopping by!

First off checking your net worth daily is a bit much (I finally had to stop as was finding myself constantly recalculating how much more I needed to RE). While I am FI and middle of the road on spending, the one area that help me RE faster is reducing my expenses. It is truly easier to continue living a frugal lifestyle than to try to reduce later in life.

I started tracking expenses last summer using personal capital. It has proved helpful; but I do note, that I still favor spending money for free time; quality over cheap, comfort to an extent and the occasional experience. I have, however, resisted buying a new road bike and avoided expensive vacations this past year.

I am really enjoying your blog; look forward to each new insightful post!

It’s great to hear perspectives of other physicians, thanks for chiming in! It sounds like we’re in similar places with our finances. I did buy a really nice used road bike last year though, and I’ve done a little travel hacking with CC points to make the vacations more affordable.

I agree with you that checking Personal Capital daily is a pointless habit. So is checking my fantasy football teams every 15 minutes on Sundays, and checking on the blog’s numbers as often as I do, but I can’t help it. To a fault, I like to know the score.

I agree with the view on being frugal without a cause. As you near FI like myself, or are FI like you, I think it is natural to loosen the purse strings a bit. Life has to be worth living and it is nice to enjoy some creature comforts. But I think it is always a matter of moderation. Tracking expenses still is nice to make sure the train isn’t going if the tracks.

Sounds like a good approach, Green Swan. Moderation is a good rule for most things in life, although some things are better left untouched. When I hear someone say “everything in moderation”, I think to myself “that doesn’t really apply to heroin or murder very well”. Cheers! -PoF

Frugality, like many things is relative. Frugal for one person is extravagant for another. Saving $40 on groceries seems like a good score to me. You would have to have about $4000 in a CD for a year in order to get that return. That said, our financial advisor told us many years ago not to bother clipping coupons anymore. We still do sometimes – but it all comes down to time versus savings. Unless you are going to save a lot, you can easily be spending your time on a minimum wage job. In short, the answer is different for everyone – when in doubt, it is better to spend less than more!

Andrew Tobias’ “The Only Investment Guide You’ll Ever Need” tells a story about a cosmetics tycoon named Charles Revson who earned 20% to 30% tax-free by buying mouthwash in bulk by the case. He explains it well in Chapter 2, A Penny Saved is Two Pennies Earned.

That was the first investing book I read, and I took that lesson to heart. I love me a good discount.

I remember he stored in boxes under a table, and hidden by a tablecloth. Of course, there’s still a cost to that. I’m slowly coming around to understand some minimalist concepts.

I don’t recall if the opportunity cost was considered, but I sometimes think about purchases in those terms. If I save 10% on an item by buying on sale, but don’t use it for a year, and the market gains 12%, did I really save any money? [No.]

Nice post. I too think it is harder to loosen the purse strings as you have been following frugal ways for many years. I’m still accumulating so I’m not in that position yet.

There is a definitely a difference between cheap and frugal, using a coupon for your movie popcorn, frugal (some might say buying popcorn at the theater is extravagant), verses digging through the garbage for containers that hadn’t had their free refills used or bringing your container back from a few weeks ago to use your free refill that was valid for day of purchase only = cheap. IMO

Not only do I choose them, but I took all of them and cropped the images to the appropriate dimensions (1340 x 250 pixels) to fit the space. The site randomizes which ones you see. I’ve got 197 so far and plan to add to the collection as I find time and appropriate shots.

Pictures within the posts are mine unless they are obviously not. I didn’t take the pictures of Indiana Jones or John Cusack, but the vast majority I did. Hope you enjoy them!

I like to frame frugality as being efficient in order to buy freedom. As you pointed out there is a big difference between frugality and cheapness. We should all strive to be more frugal and less cheap.

I think it is refreshing to hear about the struggle, so many of the articles out there about frugality make one feel guilty if they happen to enjoy anything beyond the basic needs in life. Life is meant to be lived and we all have a level of comfort that we gravitate towards. I am a big proponent of tracking spending, even if only for a few years. What I found is it didn’t change the total amount I spent (we were pretty frugal at baseline), but it did change what I spent on. It fixed my priorities. All spending became a conscious choice instead of autopilot. The happiness studies all seem to gravitate around the 75k/yr number and for the most part I found this to be pretty accurate.

Frugality is initially a means to an end. First becoming debt free, then a six-figure and then seven-figure net worth. At some point, you’ve reached that end, and frugality has become firmly entrenched as a way of life. Learning to spend takes time and isn’t necessary, of course. Spending on others is probably a good way to start. I’ll proudly wear the frugal label, but wouldn’t want to come across as cheap.

Generosity can help offset the negativity people might express when they don’t understand the difference between acting prudently frugal versus selfishly cheap.

I think most physicians who are aware of their finances have had some sort of internal or family discussion about spending habits. Housekeeper or not, how frequently to get take-out, or whether to put the kids through private school or potentially expensive extracurriculars.

I am not anywhere near FI, but I’d imagine that I’d let the reins loose more if I were. I probably should track my expenses to see–I might be spending an exorbitant amount without really knowing it.

Very True, Smart Money MD. My wife doesn’t like to spend much either, and sometimes I think we fuel each other’s frugal tendencies. I can’t spend on this if she’s not willing to spend on that, etc…

We could afford to loosen the reins a bit, but we’re happy with the status quo. Spending on others via generosity with friends and charitable causes is a good way for frugal types to try increasing the monthly budget.

There is one good reason to stay frugal, which would be the young eyes that are watching and absorbing your financial habits. Your kids may not have the opportunity to earn and save as much as you, so modeling frugal behavior may be a good education for the next generation. I (and, even more, my wife) was a lot more frugal when the kids were still at home. Once they left the nest (and I finished paying for their education) it seemed a lot less important to make sure we were saving our nickels – I’ve now traded my 8-year-old Toyota for my first German sport sedan.

Excellent point, Don. My father and his father were dentists, but we grew up with used cars, shopped at garage sales, and learned the value of a dollar. Those values stuck with me and have made it easier for me to resist the temptation of luxuries. Now that my parents are retired, they are enjoying their money. They had one European river cruise lined up for the summer, and when their neighbors invited them to go on another (@ a good price), they said “Sure”!

My boys are young and I don’t want them to grow up with a silver spoon in their mouth, either. I think we’ve found a good balance. I’ve aimed for a goal of having 40x to 50x our annual expenses before retiring for several reasons. One is to be in good shape if we are interested in some lifestyle inflation when we’re older and the nest is empty.

That is an excellent point and one we take into account whenever we talk about an expense. What behavior do we want to demonstrate for our kids? What values do we want them to have? Are our decisions aligning with those? We both grew up poverty level and we want to make sure our lifestyle is such that our kids learn some of the same lessons while in our upper middle income lifestyle.

Another great post! I’m still trying to find my balance of frugal vs. cheap and particularly like what you said about it being ‘acceptable to be frugal when your choices don’t affect your friends and family’ and ‘uncouth to be cheap’. I occasionally have to remind myself that it’s ok (more than ok- it’s great) to spend money on events with friends/family because my tendency is to feel kind of bad afterwards since I try to spend very little on myself. But friends and family are what life is all about, so I’d rather spend my money there than on a new car or crazy pricey shoes. Thanks for sharing!

This is a subject I have thought about often. I have had frugal tendencies throughout my life – I am now early retired and widowed. I was married to a woman who enjoyed spending and that allowed me to live another approach to spending so to speak, so have experienced the other side of the coin as well. At times in my life I have determined that my level of spending was too low by societal standards (felt more “peer pressure” like influence while still working I guess…) and I began taking out a weekly allowance of cash with the intent to force my self to spend what would be perceived as a more reasonable amount of money each week. But each time I did that, I just found myself growing a fatter wallet with unspent cash as I simply did not find things to buy that brought me joy. More recently, I have asked myself what is the downside to remaining frugal and what are the upsides? I perceive very few upsides to intentionally spending more money. The one you mention in your post about perhaps buying beer in a pub to BS with the neighbors is one of them. Also, massages always come to mind for me as money well spent. But literally all the other spending options I come up with – travel, eating out, new cars or clothes, “more stuff” just do not provide any appeal to me. And I see a downside in terms of the resources used to fulfill my additional spending – guess I am becoming a bit more of an earth lover/supporter as I age. So what I have settled on in my early retirement is I have begun tracking my spending on myself – not closely but ballpark – and I am also tracking my spending on others – charity, gifts to family, buying meals or drinks out for others, etc. And I have just set the goal of spending an equal or greater amount on others versus what I spend on my living expenses. This allows me to indulge my frugality – I still seem to get some kind of enjoyment out of being efficient with living expenses; but also I hope is teaching me a more generous spirit in spending an equal amount on others, particularly those I love. And based on my having moved to a place I love, I still get to thoroughly enjoy my daily frugal life because I get to hike, walk, run, fish, bicycle, etc. in my mountain paradise which truly feels like it brings me the happiness I seek. Anyhow hearing others feelings on frugality beyond a level demanded by economics of a given situation is always interesting to me and I appreciate your presenting this post.